When you are completing an Income & Expenditure Statement, and you
have worked out how much you need to live on, you need to distribute
any amount left over between your creditors.
The
first step is to judge how many of your creditors you can pay
something to. To do this, make a list of all of your priority
creditors (Fig. 1) and another list of your non-priority creditors
(Fig. 2) from your Income & Expenditure Statement.
From the Income & Expenditure Statement obtain the figure for ‘Money
for Creditors’ (figure ‘C’ on the statement). We will assume this
figure was £65.00 for our example.
We
now need to attempt to create a ‘moratorium’ with your creditors.
Being, a delay granted by your creditors in the repayment of the
debt, and all of your creditors refraining from debt recovery
action: if you maintain your side of the agreement.
on Debt Management and
Bankruptcy
Our advisors will be happy to
give you free debt advice about how you can manage your
debts
As we only have £65.00 per month, and your priority
debts will only receive a small payment, it does not
look possible to pay any amount to your non-priority
debts (in our example). However, you can decide to pay
your non-priority debts a token figure until you can
increase the payment. In this example, I have used £5 of
our money to pay three creditors a small amount each.
You will note that one creditor with a £20 debt has no
payment: with respect to all creditors, this small
amount cannot justify even a token payment (let alone
the cost to the creditor to process any payment). A
letter needs to be sent to all small creditors asking
for them to write off the debt, or at least for them to
do nothing as there is little, or no, likelihood of
payment (see Fig. 3).
We now have £60 for priority debts. A system exists and
is accepted by most creditors. The amount is worked out
as a ratio of amount of debt to payment available. One
debt at a time is calculated as follows:
(Amount available) £60 x £3500 (Amount of debt) / 6000
(Divided by Total) = 35.00
(Amount available) £60 x £ 550 (Amount of debt) / 6000
(Divided by Total) = 5.50
(Amount available) £60 x £1200 (Amount of debt) / 6000
(Divided by Total) = 12.00
(Amount available) £60 x £ 750 (Amount of debt) / 6000
(Divided by Total) = 7.50
